33 - 1.4M Net Worth Drifting From Boglehead Strategy

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Logan Roy
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by Logan Roy »

broncocountry25 wrote: Sat May 27, 2023 7:21 pm What other Bogleheads have done this in the past in their 30's?

I also have started saving for my kids to go to college but feel like college is now a complete waste of money and in 16+ years it will only be worse. Does anyone feel the same!? I really think there is massive upside for families willing to start a business right now who have the smarts from a decade + of business experience.
I think of BH philosophy as the default setting, and the bar every crazy idea has to clear. I also think it's principally a behavioural strategy, and second a costs strategy. And despite using lots of PE, and hedge funds, and real assets, and trading stocks, etc. someone like David Swensen still strikes me as a BH in principle – rather than a pariah.

From 2014, I felt it had become necessary to deviate from the BH approach. We'd never had this kind of monetary policy before, and bond prices had become completely detached from economic reality, and from their normal relationship with the stock market. The logic behind buying Treasuries when you knew central banks would be forced purchasers made sense – but tracking that passively didn't.. You didn't want to be left holding a load of worthless debt – even worse: negative yielding debt. This wasn't long-term market efficiency - it was traders getting ahead of Fed moves; or using bonds as a short-term hedge.

When 60:40, 40:60, etc. went down so hard a few years ago, that was inevitable. It was a bubble. Investing still has to be about looking at an investment and working out if it makes sense for you.. Long-dated bonds at nearly 0% made no sense at all. If I'm advising a friend with $1.4m, I'm certainly not going to say 50:50 stocks and bonds.. I'd be saying 25-50% in alternatives – and alts represent a much larger, much more accessible part of the market now. I think post-covid exposed the flaw in 60:40. I'm not a huge fan of real estate, personally. I think Private Equity and Private Infrastructure are very important asset classes. I think All Weather investing makes more academic sense than simple stock/bond portfolios. When any science/religion stops evolving, it becomes a cult. And you can be quite happy in a cult. It's probably not the best possible place to be.. Also re: college. Unless there's major reform, it's hard to imagine the workplace value of degrees not continuing to decline. Education's a business, and it's been able to run amok.
nicktenny
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by nicktenny »

As others have touched on, being a business owner isn’t just more money. It’s potentially more money by taking on more risk and responsibility.

In that way, it’s much like choosing an asset allocation.

What is your risk profile for your work life? What is your desire to take on more responsibility? Do you want to keep your business(es) small or do you want to grow and hire employees?

I am a business owner in a job where I could go work for someone else instead. I make more by being the owner, but take on vastly more responsibility. This fits my risk and work tolerances. And when it comes to my investments outside of the business, I follow a simple boglehead approach because it fits my risk profile for retirement goals.
Logan Roy
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by Logan Roy »

The thing with business is the world changes very quickly .. I've built three successful businesses .. The first was online clothing retail, which was ludicrously profitable – but gradually became oversaturated, and margins halved periodically.. That's what happens.

Two were in media, and e.g. print media went into decline really quite suddenly, and this brand I'd built was quickly worthless.. I'm lucky I've always been a pessimist, because I never really reinvested in those businesses – the earnings went into cash and stocks. So I've come to think of successful businesses as opportunities to buy a lot more assets, because long-term business success is probably extremely rare. It's often very fleeting.
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FreddieFIRE
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by FreddieFIRE »

broncocountry25 wrote: Sat May 27, 2023 8:23 pm
FreddieFIRE wrote: Sat May 27, 2023 7:50 pm
broncocountry25 wrote: Sat May 27, 2023 7:21 pm I also have started saving for my kids to go to college but feel like college is now a complete waste of money and in 16+ years it will only be worse.
Do you feel this way about degrees related to healthcare or STEM? If so, I would like to hear the logic.
No I don't. I am not attacking an education at a university. I am just very business minded, I think those in healthcare these days if they aren't subsidized by the bank of mom and dad have to pay a big price. Long education and low pay before making money and then repaying loans.
Well, you said "complete waste of money," which was what I was asking about. There are many careers in healthcare that don't require a long education and low pay before making money. Nurse? Radiologist?

That said, you're certainly entitled to your opinion. I can remember when it was a good thing if Mom and Dad helped pay for a college education. I may be out of touch.... Mom paid for my STEM education and I think it is one of the nicest things she ever did for me. It certainly wasn't a "complete waste of money."
A house and a job. Once the American dream. Two things I'll never again have. Life is simple (and good).
Leesbro63
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by Leesbro63 »

unwitting_gulag wrote: Sat May 27, 2023 11:41 pm There are two kinds of wealth; middle-class wealth, and spectacular wealth. Middle class wealth (a handful of millions, maybe $10M) is buildable in today’s dollars within a normal career-length (call it 30-40 years), a “normal” professional’s salary, and the S&P 500 index fund. $100M is however unreachable with that strategy. A different strategy would be needed. Unfortunately, that strategy has high chances of blowing-up… not just underperforming, but failing… spectacularly.

Perhaps a core BH tenet would be, to settle for mere middle-class wealth, lest one end up doing worse, by aiming for spectacular wealth?

Most of us would presumably concede, that some small amount of “play money” is acceptable…. Whether it’s invested in individual stocks, private equity, or some kind of greater-fool-theory type of investment (or gamble). But how much? If one doesn’t feel squeamish about losing the entire amount, then said amount is probably OK to stake.

As for W2 vs. business-owner – that’s entirely a matter of personality. Currently I work in a start-up, as a co-founder… and hate it. Utterly not for me. I was happier formerly, as a government employee.
This is a good post. I agree. Those aiming for spectacular wealth probably are not and should not be Bogleheads. I'm guessing that those who attain spectacular wealth on their own (without a big inheritance) end up that way somewhat by chance. I'm not discounting the hard work and risk involved, but I'm just saying that I don't think that Bill Gates, Jeff Bezos or Elon Musk started with the goal to become fabulously rich. The goal was to create something and from there they ended up in the position of becoming that rich. For every one of them, there are 100 (probably 10,000) who started something and eventually failed.

The Boglehead mentality is for those willing to optimize being upper middle class.
stoptothink
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by stoptothink »

FreddieFIRE wrote: Sun May 28, 2023 12:11 pm
broncocountry25 wrote: Sat May 27, 2023 8:23 pm
FreddieFIRE wrote: Sat May 27, 2023 7:50 pm
broncocountry25 wrote: Sat May 27, 2023 7:21 pm I also have started saving for my kids to go to college but feel like college is now a complete waste of money and in 16+ years it will only be worse.
Do you feel this way about degrees related to healthcare or STEM? If so, I would like to hear the logic.
No I don't. I am not attacking an education at a university. I am just very business minded, I think those in healthcare these days if they aren't subsidized by the bank of mom and dad have to pay a big price. Long education and low pay before making money and then repaying loans.
Well, you said "complete waste of money," which was what I was asking about. There are many careers in healthcare that don't require a long education and low pay before making money. Nurse? Radiologist?

That said, you're certainly entitled to your opinion. I can remember when it was a good thing if Mom and Dad helped pay for a college education. I may be out of touch.... Mom paid for my STEM education and I think it is one of the nicest things she ever did for me. It certainly wasn't a "complete waste of money."
The HUGE majority of posters on this board (including OP) have already or are currently saving to pay for the college education of their children. Those few posters that don't, tend to get attacked here (I used to be one of them). And that is also a separate from the discussion about the current (and future) value of college education. I am becoming progressively more jaded about academia and the value of college education (it prompted me to stop teaching a few years ago), but my kids still have their education covered in 529s, if that is what they choose.
Last edited by stoptothink on Sun May 28, 2023 12:36 pm, edited 1 time in total.
Mr. Buzzkill
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by Mr. Buzzkill »

Nothing inherently wrong with diverging from BH strategy. Just understand your goals, risk tolerance, and opportunity costs.

In my mind, being a BH is not about maximizing returns, but about minimizing regret and effort for a given level of risk-adjusted return.
A strategy that works only in bull markets isn’t much of a strategy. Anyway, four dollars a pound.
Clemblack
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by Clemblack »

strummer6969 wrote: Sat May 27, 2023 10:24 pm BH is about investing principles. What does it have to do with how you earn your money?


This.

OP is talking about how he/she chooses to earn income. There's nothing boglehead or non-boglehead about it.
Marseille07
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by Marseille07 »

Clemblack wrote: Sun May 28, 2023 12:38 pm This.

OP is talking about how he/she chooses to earn income. There's nothing boglehead or non-boglehead about it.
I think they're talking about the macro level though.

For example, they talk about 3 rental properties. They talk about running their own businesses (which presumably requires capital investment).

These two ideas are quite different than a W-2 employee contributing every paycheck toward a BH portfolio. This is what they mean by drifting from BH strategy.
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HomerJ
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by HomerJ »

Clemblack wrote: Sun May 28, 2023 12:38 pm
strummer6969 wrote: Sat May 27, 2023 10:24 pm BH is about investing principles. What does it have to do with how you earn your money?


This.

OP is talking about how he/she chooses to earn income. There's nothing boglehead or non-boglehead about it.
Yeah, it just sounds like a career change, nothing to do with investing.
They talk about running their own businesses (which presumably requires capital investment).
Ah, I see capital investment in your business could apply. And I guess he's talking about taking the profits and starting MORE businesses? Or growing the first one?

I agree that's different than passive investing.

Sounds like a good plan. A lot of risk, but a chance for a very large reward.

The really rich people in the world did it that way. But that's putting all your eggs in one basket. We don't hear as much about the people whose businesses failed.
Last edited by HomerJ on Sun May 28, 2023 1:36 pm, edited 1 time in total.
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AZAttorney11
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by AZAttorney11 »

The "Boglehead" way has been applied to so many things outside of investing that I'm not sure what it means at this point. Some posters ascribe frugality to being a Boglehead - you know, it's anti-Boglehead to buy any type of vehicle that isn't a beige, hail-damaged Camry from the late 90s that has another 50,000 miles in it.

OP, to be blunt, you're young, successful, and appear to have a strong work ethic and risk tolerance. But, as others have noted, you haven't worked through a recession, let alone a deep and prolonged one. You're also coming across too confident, potentially arrogant, and dismissive of some valid things others are saying.

Be cognizant of your leverage, save like hell, and grind, grind, and grind. Great things typically happen to individuals who do that. Additionally, I do my best to tune out some of the "noise" on Bogleheads that appears to be anti-entrepreneurship and risk-taking. I feel a lot of posters are more focused on savings and optimizing investments - which are deeply important - but there's not enough discussion focusing on increasing income, and smart risk-taking. There are plenty of millionaires and billionaires who built successful businesses and family legacies outside of the three-fund portfolio. Nothing wrong with owning hard assets like real estate, or being an owner / operator of a business that provides goods and services people value. There's also nothing wrong with the three-fund portfolio, but part of me believes this board, collectively, is too risk-averse and it has probably cost some posters money.
Wwwdotcom
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by Wwwdotcom »

broncocountry25 wrote: Sat May 27, 2023 7:21 pm I also have started saving for my kids to go to college but feel like college is now a complete waste of money and in 16+ years it will only be worse. Does anyone feel the same!? I really think there is massive upside for families willing to start a business right now who have the smarts from a decade + of business experience.
This is such an odd statement for me to read. Literally everyone I know without a degree that is a successful entrepreneur, wants their child to get a degree whether they use the material learned in coursework or not. If the business is intergenerational, most of the operations knowledge should of already been taught by 18...
Last edited by Wwwdotcom on Sun May 28, 2023 1:52 pm, edited 3 times in total.
Minderbinder
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by Minderbinder »

AZAttorney11 wrote: Sun May 28, 2023 1:36 pm
You're also coming across too confident, potentially arrogant, and dismissive of some valid things others are saying.
It definitely has a very "anyone that works for someone else is a poorly motivated sucker" with the "seen the light" and "w2 is laughable" comments vibe to it.

OP, knock yourself out. As others have said, the path you are choosing is much higher leverage. You could end up a gazillionaire or bankrupt, and that's totally fine. The world needs entrepreneurs.

So is the path that many of us are on where we won't be flying in Gulfstreams but we'll make a few more million and gladly walk away content. Different strokes for different folks and what not.
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broncocountry25
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by broncocountry25 »

Thanks to everyone who has posted. All helpful to think about and different opinions are a good thing.

Hard to reply to everyone individually.

Here are some of the main points that make me feel like it makes sense to leave my W-2 and focus my efforts elsewhere.

-Not envious of my bosses. They are all very nice people and work hard but I don't want to be forced to the same lifestyle I am now in another 10 years or longer.
-Value flexibility. I would be willing to sacrifice potential money when 60+ years old for more flexibility between 33-60. Would love to be able to hit a ski day mid week and not have to coordinate with a manager for a PTO day.
-I will have enough at 60. I really disagree with the penny pinching until a cliff event like retirement. I do not think that leads to a fulfilling life. Love my parents but beyond a big trip MAYBE once a year they do not require a ton of money. They enjoy being in the yard, seeing family, being outdoors (Colorado). I think most of us in this forum can get to a place where you have a paid off home and a chunk of money at 60 and be happy. If I hit it big I can adjust my lifestyle up sooner or simply donate more money or help others who need it.
-I am nerdy about business. I like it, love reading about it, like the trial and error of it, and enjoy the journey. I do not like doing the same thing for a mega corp to increase profits for shareholders each year. They don't care if I work hard around the holidays but my kids will!
Wife willing to keep W-2. She is happy with her set up for now...
My W-2 not scalable. If I am required to work really hard for the next decade I would like to take my chances on my own project, then if it succeeds it could lead to a bigger lifetime earnings to invest in BH portfolio or whatever else it may be.

This is a helpful way for me to think through it. For context it would be next year after we have our second kid that I take the leap. Megacorp has had a great parental leave policy that for sure was part of the consideration for staying this long. Hopefully around this time next year I will be more clear and will give you an update. Maybe will buy a business when I am on leave!

Happy Sunday! :sharebeer
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broncocountry25
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by broncocountry25 »

Minderbinder wrote: Sun May 28, 2023 1:49 pm
AZAttorney11 wrote: Sun May 28, 2023 1:36 pm
You're also coming across too confident, potentially arrogant, and dismissive of some valid things others are saying.
It definitely has a very "anyone that works for someone else is a poorly motivated sucker" with the "seen the light" and "w2 is laughable" comments vibe to it.

OP, knock yourself out. As others have said, the path you are choosing is much higher leverage. You could end up a gazillionaire or bankrupt, and that's totally fine. The world needs entrepreneurs.

So is the path that many of us are on where we won't be flying in Gulfstreams but we'll make a few more million and gladly walk away content. Different strokes for different folks and what not.
Not trying to come off as dismissive. Also not saying that working a W-2 is bad at all. I have done it for the last 10 years and it helped me a lot. Just saying that there may be a better path forward FOR ME and my personal situation.

I also don't think its as black and white as either bankrupt or flying private jets. The reality of me failing would be tucking my tail between my legs and getting a job again. I would not lever a bunch of debt and personally sign on it to launch the next apple.

The bookkeeping business my wife started with two other co-workers was bootstrapped and two years in they are breaking 100K a year with no overhead.

RE Sales was also a very low overhead/risk to get me started and I have saved that money I made to invest into the next thing.

I am just taking it step by step and now am at the point of challenging my own W-2 and if it makes sense to move forward to potentially something even better.

There is a lot of get rich quick on the internet slamming a W-2. I am far from that, I drove the crappy cars and saved as BH's preach, now I am just trying to see if I should "cash in" on my chance to improve my life again.
coachd50
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by coachd50 »

broncocountry25 wrote: Sun May 28, 2023 2:01 pm
Minderbinder wrote: Sun May 28, 2023 1:49 pm
AZAttorney11 wrote: Sun May 28, 2023 1:36 pm
You're also coming across too confident, potentially arrogant, and dismissive of some valid things others are saying.
It definitely has a very "anyone that works for someone else is a poorly motivated sucker" with the "seen the light" and "w2 is laughable" comments vibe to it.

OP, knock yourself out. As others have said, the path you are choosing is much higher leverage. You could end up a gazillionaire or bankrupt, and that's totally fine. The world needs entrepreneurs.

So is the path that many of us are on where we won't be flying in Gulfstreams but we'll make a few more million and gladly walk away content. Different strokes for different folks and what not.
Not trying to come off as dismissive. Also not saying that working a W-2 is bad at all. I have done it for the last 10 years and it helped me a lot. Just saying that there may be a better path forward FOR ME and my personal situation.

I also don't think its as black and white as either bankrupt or flying private jets. The reality of me failing would be tucking my tail between my legs and getting a job again. I would not lever a bunch of debt and personally sign on it to launch the next apple.

The bookkeeping business my wife started with two other co-workers was bootstrapped and two years in they are breaking 100K a year with no overhead.

RE Sales was also a very low overhead/risk to get me started and I have saved that money I made to invest into the next thing.

I am just taking it step by step and now am at the point of challenging my own W-2 and if it makes sense to move forward to potentially something even better.

There is a lot of get rich quick on the internet slamming a W-2. I am far from that, I drove the crappy cars and saved as BH's preach, now I am just trying to see if I should "cash in" on my chance to improve my life again.
I still don't understand how any of this has much to do with the "boglehead philosophy" (whatever that is, as someone pointed out above). Especially any of the starting business vs w2 parts. I suppose the idea of investing the income from that business into private equity deals, venture capitalism investing, options trading, seeking out and buying IPOs etc would be considered veering from the boglehead strategy. But starting your own business. Nothing to do with it.
Young Boglehead
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by Young Boglehead »

FreddieFIRE wrote: Sun May 28, 2023 12:11 pm
broncocountry25 wrote: Sat May 27, 2023 8:23 pm
FreddieFIRE wrote: Sat May 27, 2023 7:50 pm
broncocountry25 wrote: Sat May 27, 2023 7:21 pm I also have started saving for my kids to go to college but feel like college is now a complete waste of money and in 16+ years it will only be worse.
Do you feel this way about degrees related to healthcare or STEM? If so, I would like to hear the logic.
No I don't. I am not attacking an education at a university. I am just very business minded, I think those in healthcare these days if they aren't subsidized by the bank of mom and dad have to pay a big price. Long education and low pay before making money and then repaying loans.
Well, you said "complete waste of money," which was what I was asking about. There are many careers in healthcare that don't require a long education and low pay before making money. Nurse? Radiologist?

That said, you're certainly entitled to your opinion. I can remember when it was a good thing if Mom and Dad helped pay for a college education. I may be out of touch.... Mom paid for my STEM education and I think it is one of the nicest things she ever did for me. It certainly wasn't a "complete waste of money."
I have to imagine you mean radiology tech instead of radiologist... a radiologist is a physician meaning 4 years of med school (2-300k) and 6 years of residency/fellowship at around 50-80k
redbarn
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by redbarn »

The OP has some controversial takes on certain topics (e.g. college, working for an employer) that have distracted from the main investment question, which is interesting and not one I have seen discussed too often here. If you need to use your own savings to start/develop a business, how should that be balanced with conventional retirement savings?

The OP's approach is to invest up to the employer match, maximize (?) Roth accounts, and put some (how much?) in a 529. It seems OP's household income quite high. If so, that sounds like way too little conventional investment to me. Why not at least maximize the 401ks? If maximizing the 401k would substantially affect the business investment plans, then the OP might be making too little money to reasonably take this kind of risk.
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by muffins14 »

FreddieFIRE wrote: Sat May 27, 2023 7:50 pm
broncocountry25 wrote: Sat May 27, 2023 7:21 pm I also have started saving for my kids to go to college but feel like college is now a complete waste of money and in 16+ years it will only be worse.
Do you feel this way about degrees related to healthcare or STEM? If so, I would like to hear the logic.
It probably will be worse in 16 years because most people won’t be able to read beyond a 5th grade level. And those who can’t will resent those who can practice “black magic” like mathematics, or read “witch books” like Shakespeare, or riddles, like poetry
Crom laughs at your Four Winds
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White Coat Investor
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by White Coat Investor »

broncocountry25 wrote: Sat May 27, 2023 7:21 pm Hello BH's,

I was a finance/real estate major in school and graduated in 2013. Found this blog when I started my own (should have continued it). As much as I love the simplicity of a BH strategy I am getting tempted to take more risk.

While I have a portion of my families net worth in the BH strategy for the long term I have drifted from the core principals and it has accelerated our wealth.

We own three rentals, invest in PE, and then the remainder is in the BH portfolio (no bonds).

I love the BH strategy for those who are looking to have a traditional retirement. I think it has a great probability for success. I am starting to drift from the strategy personally though for anything beyond my BH portfolio. I want to have CONTROL and OWNERSHIP, not be at the mercy of the shareholders to approve compensation increases.

Currently we are doing employer match for 401K's, ROTH IRA's, then some extra in a 529. The rest is being invested in taxable and short term savings to start new business ventures.

In the last 3 years we have "seen the light" with getting away from W-2 and moving to business ownership. The amount of money we have made in business vs. the time and effort we have put in at W-2's is laughable.

We are type A people and dedicated to anything we do. I am leaving my W-2 next year and diving into full time entrepreneurship.

What other Bogleheads have done this in the past in their 30's?

I also have started saving for my kids to go to college but feel like college is now a complete waste of money and in 16+ years it will only be worse. Does anyone feel the same!? I really think there is massive upside for families willing to start a business right now who have the smarts from a decade + of business experience.
Many of us have started businesses and it has changed our financial lives. That has little to nothing to do with our investing strategies though.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course
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FreddieFIRE
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by FreddieFIRE »

Young Boglehead wrote: Sun May 28, 2023 2:21 pm
FreddieFIRE wrote: Sun May 28, 2023 12:11 pm
broncocountry25 wrote: Sat May 27, 2023 8:23 pm
FreddieFIRE wrote: Sat May 27, 2023 7:50 pm
broncocountry25 wrote: Sat May 27, 2023 7:21 pm I also have started saving for my kids to go to college but feel like college is now a complete waste of money and in 16+ years it will only be worse.
Do you feel this way about degrees related to healthcare or STEM? If so, I would like to hear the logic.
No I don't. I am not attacking an education at a university. I am just very business minded, I think those in healthcare these days if they aren't subsidized by the bank of mom and dad have to pay a big price. Long education and low pay before making money and then repaying loans.
Well, you said "complete waste of money," which was what I was asking about. There are many careers in healthcare that don't require a long education and low pay before making money. Nurse? Radiologist?

That said, you're certainly entitled to your opinion. I can remember when it was a good thing if Mom and Dad helped pay for a college education. I may be out of touch.... Mom paid for my STEM education and I think it is one of the nicest things she ever did for me. It certainly wasn't a "complete waste of money."
I have to imagine you mean radiology tech instead of radiologist... a radiologist is a physician meaning 4 years of med school (2-300k) and 6 years of residency/fellowship at around 50-80k
My mistake. I really just meant other healthcare positions that don't require what you described. I was primarily thinking nurse but didn't want to limit it to that.
A house and a job. Once the American dream. Two things I'll never again have. Life is simple (and good).
Logan Roy
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by Logan Roy »

muffins14 wrote: Sun May 28, 2023 2:51 pm
FreddieFIRE wrote: Sat May 27, 2023 7:50 pm
broncocountry25 wrote: Sat May 27, 2023 7:21 pm I also have started saving for my kids to go to college but feel like college is now a complete waste of money and in 16+ years it will only be worse.
Do you feel this way about degrees related to healthcare or STEM? If so, I would like to hear the logic.
It probably will be worse in 16 years because most people won’t be able to read beyond a 5th grade level. And those who can’t will resent those who can practice “black magic” like mathematics, or read “witch books” like Shakespeare, or riddles, like poetry
The problem nowadays is you can have degrees in English and Philosophy, and still not be able to read or write properly. I'm recalling someone I worked with not long ago specifically with those degrees.

Lecturer friends tell me kids are turning up with much lower standard of numeracy and literacy than 10 years ago. And because something like 70% of colleges are in financial distress, they need the students, they let almost anyone in on clearing, and they have to lower standards to meet the students. Employers agree it would make infinitely more sense to nudge kids into apprenticeships, and leave academia for the 10-20% who are suited to it.
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by zhiwiller »

Logan Roy wrote: Sun May 28, 2023 3:36 pm The problem nowadays is you can have degrees in English and Philosophy, and still not be able to read or write properly. I'm recalling someone I worked with not long ago specifically with those degrees.

Lecturer friends tell me kids are turning up with much lower standard of numeracy and literacy than 10 years ago. And because something like 70% of colleges are in financial distress, they need the students, they let almost anyone in on clearing, and they have to lower standards to meet the students. Employers agree it would make infinitely more sense to nudge kids into apprenticeships, and leave academia for the 10-20% who are suited to it.
I transitioned back to industry a couple years ago after 10 years in academia. The fall off in quality of students over that time was absolutely stunning. I had kids (I guess technically adults, but let's be real) by the end who couldn't write complete sentences, who didn't know how to find a file on their computers, and who didn't even know how to ask questions. And these weren't slipped-under-the-radar exceptions. This was a proportion growing in every class. There has always been some degree of "kids these days" among grouchy elders, but this goes way beyond cherry picking and pretending there are generational differences that didn't exist in our own cohorts. And university administrations have no incentive to do anything but push them along. I don't think people realize how bad it is.

I know this doesn't have much to do with the original post, but it isn't necessarily that colleges are all of a sudden no longer worthwhile, but that they aren't incentivized or equipped to bring students up to the requisite level for what services they have to offer. We can't solve any of these problems because no one is ready to face it without playing blame games. I don't envy the professors I left behind. I wouldn't tell people college isn't worthwhile though. Students just have to come to it at least as prepared as students were ten years ago and they have to find colleges that set and enforce actual rigorous standards.
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by Logan Roy »

zhiwiller wrote: Sun May 28, 2023 4:43 pm
Logan Roy wrote: Sun May 28, 2023 3:36 pm The problem nowadays is you can have degrees in English and Philosophy, and still not be able to read or write properly. I'm recalling someone I worked with not long ago specifically with those degrees.

Lecturer friends tell me kids are turning up with much lower standard of numeracy and literacy than 10 years ago. And because something like 70% of colleges are in financial distress, they need the students, they let almost anyone in on clearing, and they have to lower standards to meet the students. Employers agree it would make infinitely more sense to nudge kids into apprenticeships, and leave academia for the 10-20% who are suited to it.
I transitioned back to industry a couple years ago after 10 years in academia. The fall off in quality of students over that time was absolutely stunning. I had kids (I guess technically adults, but let's be real) by the end who couldn't write complete sentences, who didn't know how to find a file on their computers, and who didn't even know how to ask questions. And these weren't slipped-under-the-radar exceptions. This was a proportion growing in every class. There has always been some degree of "kids these days" among grouchy elders, but this goes way beyond cherry picking and pretending there are generational differences that didn't exist in our own cohorts. And university administrations have no incentive to do anything but push them along. I don't think people realize how bad it is.

I know this doesn't have much to do with the original post, but it isn't necessarily that colleges are all of a sudden no longer worthwhile, but that they aren't incentivized or equipped to bring students up to the requisite level for what services they have to offer. We can't solve any of these problems because no one is ready to face it without playing blame games. I don't envy the professors I left behind. I wouldn't tell people college isn't worthwhile though. Students just have to come to it at least as prepared as students were ten years ago and they have to find colleges that set and enforce actual rigorous standards.
Exactly how it's been in the UK, and the falloff really has been quite dramatic, I hear, over the past decade. Friends blame schools first, for not getting kids up to a basic level of education. But then as you say, colleges are only really incentivised to keep paying the bills, so they let kids more or less dictate what gets taught, as the colleges need their money.

I really think we need an outside body regulating academia. The other race to the bottom in academia is the need to keep publishing. This is why we've wound up with several thousand (I think) 'factors'. Factors may never make investors a net profit, improve market efficiency or even describe how markets work in any useful way – but they provide endless avenues to publish. How we got a situation where the likes of Lacan, Derrida and Foucault could just say any old nonsense they wanted, and people treat them like gurus.
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by Wanderingwheelz »

unwitting_gulag wrote: Sat May 27, 2023 11:41 pm There are two kinds of wealth; middle-class wealth, and spectacular wealth. Middle class wealth (a handful of millions, maybe $10M) is buildable in today’s dollars within a normal career-length (call it 30-40 years), a “normal” professional’s salary, and the S&P 500 index fund. $100M is however unreachable with that strategy. A different strategy would be needed. Unfortunately, that strategy has high chances of blowing-up… not just underperforming, but failing… spectacularly.

Perhaps a core BH tenet would be, to settle for mere middle-class wealth, lest one end up doing worse, by aiming for spectacular wealth?

Most of us would presumably concede, that some small amount of “play money” is acceptable…. Whether it’s invested in individual stocks, private equity, or some kind of greater-fool-theory type of investment (or gamble). But how much? If one doesn’t feel squeamish about losing the entire amount, then said amount is probably OK to stake.

As for W2 vs. business-owner – that’s entirely a matter of personality. Currently I work in a start-up, as a co-founder… and hate it. Utterly not for me. I was happier formerly, as a government employee.
Middle class wealth- $10 million?

I’m going to assume this info from 2019 is still more or less accurate: “The minimum net worth of the top 1% of households is roughly $11.1 million. The top 10% have a net worth of about $1.2 million.”
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by Logan Roy »

Wanderingwheelz wrote: Sun May 28, 2023 6:03 pm
unwitting_gulag wrote: Sat May 27, 2023 11:41 pm There are two kinds of wealth; middle-class wealth, and spectacular wealth. Middle class wealth (a handful of millions, maybe $10M) is buildable in today’s dollars within a normal career-length (call it 30-40 years), a “normal” professional’s salary, and the S&P 500 index fund. $100M is however unreachable with that strategy. A different strategy would be needed. Unfortunately, that strategy has high chances of blowing-up… not just underperforming, but failing… spectacularly.

Perhaps a core BH tenet would be, to settle for mere middle-class wealth, lest one end up doing worse, by aiming for spectacular wealth?

Most of us would presumably concede, that some small amount of “play money” is acceptable…. Whether it’s invested in individual stocks, private equity, or some kind of greater-fool-theory type of investment (or gamble). But how much? If one doesn’t feel squeamish about losing the entire amount, then said amount is probably OK to stake.

As for W2 vs. business-owner – that’s entirely a matter of personality. Currently I work in a start-up, as a co-founder… and hate it. Utterly not for me. I was happier formerly, as a government employee.
Middle class wealth- $10 million?

I’m going to assume this info from 2019 is still more or less accurate: “The minimum net worth of the top 1% of households is roughly $11.1 million. The top 10% have a net worth of about $1.2 million.”
I suppose as an upper level of what's achievable as a white collar worker in today's society. $10m is achievable – but it's not a level of wealth that elevates you to the level of 'rich'. It's sort of an awkward level of wealth, as you don't need to work, but you could buy an entry-level yacht or jet, and then you wouldn't have any money.
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by coachd50 »

Wanderingwheelz wrote: Sun May 28, 2023 6:03 pm
unwitting_gulag wrote: Sat May 27, 2023 11:41 pm There are two kinds of wealth; middle-class wealth, and spectacular wealth. Middle class wealth (a handful of millions, maybe $10M) is buildable in today’s dollars within a normal career-length (call it 30-40 years), a “normal” professional’s salary, and the S&P 500 index fund. $100M is however unreachable with that strategy. A different strategy would be needed. Unfortunately, that strategy has high chances of blowing-up… not just underperforming, but failing… spectacularly.

Perhaps a core BH tenet would be, to settle for mere middle-class wealth, lest one end up doing worse, by aiming for spectacular wealth?

Most of us would presumably concede, that some small amount of “play money” is acceptable…. Whether it’s invested in individual stocks, private equity, or some kind of greater-fool-theory type of investment (or gamble). But how much? If one doesn’t feel squeamish about losing the entire amount, then said amount is probably OK to stake.

As for W2 vs. business-owner – that’s entirely a matter of personality. Currently I work in a start-up, as a co-founder… and hate it. Utterly not for me. I was happier formerly, as a government employee.
Middle class wealth- $10 million?

I’m going to assume this info from 2019 is still more or less accurate: “The minimum net worth of the top 1% of households is roughly $11.1 million. The top 10% have a net worth of about $1.2 million.”
The terminology does raise eyebrows, and probably isn't the "best" choice- however the concept being conveyed is accurate. There are paths to levels of net worth that many would say is "wealthy" that can be followed by many. Then there is another level of wealth that isn't going to be achieved through a being an employee, maxing out tax advantaged accounts, living below ones means etc.
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by stoptothink »

muffins14 wrote: Sun May 28, 2023 2:51 pm
FreddieFIRE wrote: Sat May 27, 2023 7:50 pm
broncocountry25 wrote: Sat May 27, 2023 7:21 pm I also have started saving for my kids to go to college but feel like college is now a complete waste of money and in 16+ years it will only be worse.
Do you feel this way about degrees related to healthcare or STEM? If so, I would like to hear the logic.
It probably will be worse in 16 years because most people won’t be able to read beyond a 5th grade level. And those who can’t will resent those who can practice “black magic” like mathematics, or read “witch books” like Shakespeare, or riddles, like poetry
Unfortunately, skills like being able to read and do basic math seem to have progressively decreasing association with whether or not one is attending school. We didn't need school to teach our kids to read our do basic math, we taught them. My kids attend a decent school and have had decent teachers, but I still feel comfortable agreeing that our education system, in general, does a poor job at teaching these things and it is objectively getting worse (at least based on test scores the last few years). And fundamental education appears, to us, to be becoming less of a priority, especially on college campuses (again, it's why I stopped teaching).

I don't see OP saying they are giving up educating their children, simply that they believe college may not be the most effective environment for that. While we have saved for our kids' college and will encourage them, if I were to guess now, I'd strongly bet it will be a total waste of time (and money) for one of my two children.
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by blackbird »

broncocountry25 wrote: Sat May 27, 2023 7:21 pm Hello BH's,

I was a finance/real estate major in school and graduated in 2013. Found this blog when I started my own (should have continued it). As much as I love the simplicity of a BH strategy I am getting tempted to take more risk.

While I have a portion of my families net worth in the BH strategy for the long term I have drifted from the core principals and it has accelerated our wealth.

We own three rentals, invest in PE, and then the remainder is in the BH portfolio (no bonds).

I love the BH strategy for those who are looking to have a traditional retirement. I think it has a great probability for success. I am starting to drift from the strategy personally though for anything beyond my BH portfolio. I want to have CONTROL and OWNERSHIP, not be at the mercy of the shareholders to approve compensation increases.

Currently we are doing employer match for 401K's, ROTH IRA's, then some extra in a 529. The rest is being invested in taxable and short term savings to start new business ventures.

In the last 3 years we have "seen the light" with getting away from W-2 and moving to business ownership. The amount of money we have made in business vs. the time and effort we have put in at W-2's is laughable.

We are type A people and dedicated to anything we do. I am leaving my W-2 next year and diving into full time entrepreneurship.

What other Bogleheads have done this in the past in their 30's?

I also have started saving for my kids to go to college but feel like college is now a complete waste of money and in 16+ years it will only be worse. Does anyone feel the same!? I really think there is massive upside for families willing to start a business right now who have the smarts from a decade + of business experience.

I've read through most of the responses and I think you've gotten some good advice here. I'd say go for it but just be prepared. Small business has all the risks you read about. Don't overcommit to the point of ruin. Just know that you'll be giving up some critical years to make it to higher levels with W2 income. The window is fairly narrow. You're young and can afford to give it a whirl if you don't see a W2 path to make it. It's a big world, though, so consider all options not just those in front of you. By late 30s you're pretty much either going to make it or not. There are exceptions but you can't count on being one.

I chose the W2 route, invested in index funds, and made it to $20M by age 50. I'm not done yet. My experience isn't typical and I've had some good fortune by taking known risks on the W2 side. Made CEO at age 43 through CFO role at a distressed company. I'm not big on real estate and can't imagine running rental units. Not my style. I have a good friend that seems to have done well doing so on the side but it keeps him quite busy and I wonder if he's just invested prudently in the markets and could have achieved similar results. I don't know that but he did have some luck with timing and location.

I wouldn't say college today is a waste of time. Depends on the degree. STEM still produces good outcomes. Doubtful about the rest. I think this is pretty common knowledge.

Blackbird
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by international001 »

unwitting_gulag wrote: Sat May 27, 2023 11:41 pm There are two kinds of wealth; middle-class wealth, and spectacular wealth. Middle class wealth (a handful of millions, maybe $10M) is buildable in today’s dollars within a normal career-length (call it 30-40 years), a “normal” professional’s salary, and the S&P 500 index fund. $100M is however unreachable with that strategy. A different strategy would be needed. Unfortunately, that strategy has high chances of blowing-up… not just underperforming, but failing… spectacularly.
Exactly. Creating a a business to have this kind of wealth is like picking an individual stock.
Nothing more anti-BH than that.
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by YeahBuddy »

I'm 42 and I tried many different avenues before I found the Boglehead strategy. Since that time, I've encountered many who believed their way was better. Either investment strategy or small business owners. Many did well for a short period and then things came back to earth.

I don't intend to do anything differently. I will continue with my W-2. I have much more free time than many business owners I know and that's worth a lot to me.
Light weight baby!
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by unwitting_gulag »

coachd50 wrote: Sun May 28, 2023 6:39 pm
Wanderingwheelz wrote: Sun May 28, 2023 6:03 pm
unwitting_gulag wrote: Sat May 27, 2023 11:41 pm Perhaps a core BH tenet would be, to settle for mere middle-class wealth, lest one end up doing worse, by aiming for spectacular wealth?
Middle class wealth- $10 million?

I’m going to assume this info from 2019 is still more or less accurate: “The minimum net worth of the top 1% of households is roughly $11.1 million. The top 10% have a net worth of about $1.2 million.”
The terminology does raise eyebrows, and probably isn't the "best" choice- however the concept being conveyed is accurate. There are paths to levels of net worth that many would say is "wealthy" that can be followed by many. Then there is another level of wealth that isn't going to be achieved through a being an employee, maxing out tax advantaged accounts, living below ones means etc.
It's a play on "The Millionaire Next Door", the concept being, that rather ordinary-folk can accumulate a handful of millions, whether by BH-style index fund investing, or some parallel means. The theme is a sober, conservative investment, or running of a small business. Towards the latter, compare a small legal firm, that makes its money by representing DUI defendants, divorce cases, maybe small-time tax disputes... vs. a Silicon-Valley style of start-up, that seeks to become a "unicorn" before going IPO.

As for the 1%, we have to remember, that with some 330M American residents, math says that there must be 3.3M within the top 1%. That's a lot. When I think of genuine wealth, I think of an aristocracy. How many Peers of the Realm were there in Queen Elizabeth I's court? How many noblemen were there in the time of Louis XIV? How many grand landowners in Czarist Russia? More properly, what was the ratio of such personages, to the total citizenry? Maybe 0.01%? Well, 0.01% of 330M is 33,000. What does it take, to enter that exalted echelon? I'm guessing, at least $100M per person, net-worth.

Putting this in the OP's terms, begin with $1.4M at age 33. Assume 6% annual rate of return, after inflation, including dividends, disregarding taxes. How long would it take - freezing inflation in this calculation - for the OP to go from $1.4M, to $100M? That's (1 + 0.06)^x = 100/1.4. Solving for x, we get around 73. It would take 73 years. Will the OP live to 106?

Let's try with more "plausible" numbers. Suppose that the OP wishes to reach $100M, again in today's dollars, in only 30 years... so, age 63. What annual rate of return, after inflation, would be required? Answer: around 15%. Does anyone know how to average 15%, year after year, reliably? I don't.
Wanderingwheelz
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by Wanderingwheelz »

Logan Roy wrote: Sun May 28, 2023 6:34 pm
Wanderingwheelz wrote: Sun May 28, 2023 6:03 pm
unwitting_gulag wrote: Sat May 27, 2023 11:41 pm There are two kinds of wealth; middle-class wealth, and spectacular wealth. Middle class wealth (a handful of millions, maybe $10M) is buildable in today’s dollars within a normal career-length (call it 30-40 years), a “normal” professional’s salary, and the S&P 500 index fund. $100M is however unreachable with that strategy. A different strategy would be needed. Unfortunately, that strategy has high chances of blowing-up… not just underperforming, but failing… spectacularly.

Perhaps a core BH tenet would be, to settle for mere middle-class wealth, lest one end up doing worse, by aiming for spectacular wealth?

Most of us would presumably concede, that some small amount of “play money” is acceptable…. Whether it’s invested in individual stocks, private equity, or some kind of greater-fool-theory type of investment (or gamble). But how much? If one doesn’t feel squeamish about losing the entire amount, then said amount is probably OK to stake.

As for W2 vs. business-owner – that’s entirely a matter of personality. Currently I work in a start-up, as a co-founder… and hate it. Utterly not for me. I was happier formerly, as a government employee.
Middle class wealth- $10 million?

I’m going to assume this info from 2019 is still more or less accurate: “The minimum net worth of the top 1% of households is roughly $11.1 million. The top 10% have a net worth of about $1.2 million.”
I suppose as an upper level of what's achievable as a white collar worker in today's society. $10m is achievable – but it's not a level of wealth that elevates you to the level of 'rich'. It's sort of an awkward level of wealth, as you don't need to work, but you could buy an entry-level yacht or jet, and then you wouldn't have any money.
What is a level of “rich” if it’s not $10MM?

Are you implying that in order to be “rich” a person need to have certain tangible items that that may actually not even want? Say, a yacht or a jet.

Is it possible for a person to feel rich, but not be rich by another persons measure?
Being wrong compounds forever.
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by smitcat »

RobLyons wrote: Sun May 28, 2023 8:48 pm I'm 42 and I tried many different avenues before I found the Boglehead strategy. Since that time, I've encountered many who believed their way was better. Either investment strategy or small business owners. Many did well for a short period and then things came back to earth.

I don't intend to do anything differently. I will continue with my W-2. I have much more free time than many business owners I know and that's worth a lot to me.
"Many did well for a short period and then things came back to earth."
We wish that we started our own business's earlier than we actually did. While we were in our small businesses for 15+ years the earlier start would have been great. After selling a few years back the new owners are continuing to do really well.
Wanderingwheelz
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by Wanderingwheelz »

smitcat wrote: Mon May 29, 2023 9:06 am
RobLyons wrote: Sun May 28, 2023 8:48 pm I'm 42 and I tried many different avenues before I found the Boglehead strategy. Since that time, I've encountered many who believed their way was better. Either investment strategy or small business owners. Many did well for a short period and then things came back to earth.

I don't intend to do anything differently. I will continue with my W-2. I have much more free time than many business owners I know and that's worth a lot to me.
"Many did well for a short period and then things came back to earth."
We wish that we started our own business's earlier than we actually did. While we were in our small businesses for 15+ years the earlier start would have been great. After selling a few years back the new owners are continuing to do really well.
I’m not surprised.

We’d like to sell our business but it’s going to be next to impossible to get a value that makes selling anything but a less-than-ideal situation. In our case I think it would be hard to get a value that equals last years profits. One years profits!

Also, for those who think business owners are working 70 hours a week like the stereotype on TV, we spent @ 100 nights out of town in 2022, and that is in addition to the recreating we did close to home.
Being wrong compounds forever.
smitcat
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by smitcat »

Wanderingwheelz wrote: Mon May 29, 2023 9:23 am
smitcat wrote: Mon May 29, 2023 9:06 am
RobLyons wrote: Sun May 28, 2023 8:48 pm I'm 42 and I tried many different avenues before I found the Boglehead strategy. Since that time, I've encountered many who believed their way was better. Either investment strategy or small business owners. Many did well for a short period and then things came back to earth.

I don't intend to do anything differently. I will continue with my W-2. I have much more free time than many business owners I know and that's worth a lot to me.
"Many did well for a short period and then things came back to earth."
We wish that we started our own business's earlier than we actually did. While we were in our small businesses for 15+ years the earlier start would have been great. After selling a few years back the new owners are continuing to do really well.
I’m not surprised.

We’d like to sell our business but it’s going to be next to impossible to get a value that makes selling anything but a less-than-ideal situation. In our case I think it would be hard to get a value that equals last years profits. One years profits!

Also, for those who think business owners are working 70 hours a week like the stereotype on TV, we spent @ 100 nights out of town in 2022, and that is in addition to the recreating we did close to home.
One good source of data for both listed business's as well as sold businesses is bizbuysell(dot)com - you can sort by type of business, area, and drill to detail. For a small fee you can access historical data that may help. We sold for a multiple of about 3.5X, the sale price was not our only criteria for a sale.
Other sources for sales prices can include...
- local SBA
- local SCORE
- local business broker
- some chamber of commerce centers
- sometimes active local colleges
Logan Roy
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by Logan Roy »

Wanderingwheelz wrote: Mon May 29, 2023 8:32 am
Logan Roy wrote: Sun May 28, 2023 6:34 pm
Wanderingwheelz wrote: Sun May 28, 2023 6:03 pm
unwitting_gulag wrote: Sat May 27, 2023 11:41 pm There are two kinds of wealth; middle-class wealth, and spectacular wealth. Middle class wealth (a handful of millions, maybe $10M) is buildable in today’s dollars within a normal career-length (call it 30-40 years), a “normal” professional’s salary, and the S&P 500 index fund. $100M is however unreachable with that strategy. A different strategy would be needed. Unfortunately, that strategy has high chances of blowing-up… not just underperforming, but failing… spectacularly.

Perhaps a core BH tenet would be, to settle for mere middle-class wealth, lest one end up doing worse, by aiming for spectacular wealth?

Most of us would presumably concede, that some small amount of “play money” is acceptable…. Whether it’s invested in individual stocks, private equity, or some kind of greater-fool-theory type of investment (or gamble). But how much? If one doesn’t feel squeamish about losing the entire amount, then said amount is probably OK to stake.

As for W2 vs. business-owner – that’s entirely a matter of personality. Currently I work in a start-up, as a co-founder… and hate it. Utterly not for me. I was happier formerly, as a government employee.
Middle class wealth- $10 million?

I’m going to assume this info from 2019 is still more or less accurate: “The minimum net worth of the top 1% of households is roughly $11.1 million. The top 10% have a net worth of about $1.2 million.”
I suppose as an upper level of what's achievable as a white collar worker in today's society. $10m is achievable – but it's not a level of wealth that elevates you to the level of 'rich'. It's sort of an awkward level of wealth, as you don't need to work, but you could buy an entry-level yacht or jet, and then you wouldn't have any money.
What is a level of “rich” if it’s not $10MM?

Are you implying that in order to be “rich” a person need to have certain tangible items that that may actually not even want? Say, a yacht or a jet.

Is it possible for a person to feel rich, but not be rich by another persons measure?
$10m is 'wealthy'. But if you have a wealth manager and some fairly conservative investments, you're probably making a 4% return after fees, which is $400k, and in the UK, you're probably being taxed at 40% (there are workarounds), so you're seeing maybe $240k ($300k if you set yourself up as a ltd company and pay corporation tax).

Then you've got three kids in private school, at $50k each. You're left with $90k/year. You're not rich. Couple of iPhones, couple of cars, and you'd still have to work a day job.

I felt wealthy by the time I was midway into 6 figures, because I had no responsibilities, and I've been quite adept/lucky with investing. But objectively, there were certainly limits to what I could do. If I wanted two kids in top schools, I'd need a pretty wealthy partner. $10m managed extremely well could bump you up a bit. But it doesn't elevate from the middle classes. It's not an uncommon amount of capital.
smooth_rough
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by smooth_rough »

Whether or not to invest in personal business, real estate, or send kids to college? IMO mods are too uptight, but this is mish mash of unrelated topics.
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by Boston Terrier Fan »

broncocountry25 wrote: Sat May 27, 2023 7:47 pm
Wanderingwheelz wrote: Sat May 27, 2023 7:41 pm You sure aren’t the first 33 year old whose never invested through a big recession who thinks their way is better than a simple total market index fund based portfolio.

I’m not saying what you are doing is wrong, I’m only saying that sometimes it’s wise to pay attention to why so many people with gray hair are keeping it simple and accepting the market return.
Fair, I think I am asking more about those who have reinvested in themselves instead of a total market portfolio. I made more from my side hustle last year and my W-2 is in financial services. My wife started a business with 2 others at work that is starting to pick up major steam as well. When I see the grey hairs in my office I see people that struggle with tech and running reports. They lean on myself and my wife hard and I think I can take what we have learned and do better in the free market.
I’ve done something similar. I worked at a handful of big corps doing software development before I decided to get a PhD in Computer Science. Got an offer at my first choice school for a Asst professor position, but just didn’t love the environment. I quit and was hired by Palm Pilot to teach people at various corps to program for the Palm Pilot. Shortly after I started my own company and things grew from there. I’ve been heading up the company for more than 20 years now and don’t regret any of it. It is a great feeling to have control over your own direction. When I’m making my own choices, I’m always learning, mostly from mistakes…
Leesbro63
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by Leesbro63 »

There is a recent episode of “Succession” where “Cousin Greg” says his grandfather will leave him $5M. The mega wealthy Cousin Conor tells Greg that $5M is a nightmare. Enough that it’s not worth working, but you can’t retire.

$10M used to be wealthy around here. Maybe with the 2021-23 inflation it’s $12M now.
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Garco
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by Garco »

The OP Asks: "What other Bogleheads have done this in the past in their 30's?

I also have started saving for my kids to go to college but feel like college is now a complete waste of money and in 16+ years it will only be worse. Does anyone feel the same!? I really think there is massive upside for families willing to start a business right now who have the smarts from a decade + of business experience."


I find an answer in the poem "To a Mouse," by Robert Burns. Approximate line from the original.

"The best-laid schemes o' mice and men gang aft agley, and lea' us nought but grief and pain for promised joy."

Going to college is NOT a COMPLETE WASTE of money. But what you get out of college depends on how much you invest in the learning of key tools (writing and math and statistics, perhaps also athletic skills) and the interpersonal contacts you make with teachers and fellow students.

Your point of view is very short-sighted.

Every college degree that members of my family -- including my extended family -- earned in the last 3 generations has paid off. It takes tools, time, and persistence.
stoptothink
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by stoptothink »

Leesbro63 wrote: Mon May 29, 2023 10:16 am There is a recent episode of “Succession” where “Cousin Greg” says his grandfather will leave him $5M. The mega wealthy Cousin Conor tells Greg that $5M is a nightmare. Enough that it’s not worth working, but you can’t retire.

$10M used to be wealthy around here. Maybe with the 2021-23 inflation it’s $12M now.
According to a recent Schwab survey https://www.kiplinger.com/personal-fina ... iabilities.), Americans - on average - believe that the threshold for "rich" is networth of $2.2M. We're pretty darn close to that at 42 and 37. We have way more than we ever could have imagined, but I wouldn't say we consider ourselves rich; probably because we are super frugal. If our parents, siblings, and friends knew our NW, I'd bet the large majority of them would consider us rich (her parents would lose their mind).

This totally depends on your social circle. For this board, it's no surprise that the threshold is higher than what the average American thinks.
Wanderingwheelz
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by Wanderingwheelz »

Logan Roy wrote: Mon May 29, 2023 9:53 am
Wanderingwheelz wrote: Mon May 29, 2023 8:32 am
Logan Roy wrote: Sun May 28, 2023 6:34 pm
Wanderingwheelz wrote: Sun May 28, 2023 6:03 pm
unwitting_gulag wrote: Sat May 27, 2023 11:41 pm There are two kinds of wealth; middle-class wealth, and spectacular wealth. Middle class wealth (a handful of millions, maybe $10M) is buildable in today’s dollars within a normal career-length (call it 30-40 years), a “normal” professional’s salary, and the S&P 500 index fund. $100M is however unreachable with that strategy. A different strategy would be needed. Unfortunately, that strategy has high chances of blowing-up… not just underperforming, but failing… spectacularly.

Perhaps a core BH tenet would be, to settle for mere middle-class wealth, lest one end up doing worse, by aiming for spectacular wealth?

Most of us would presumably concede, that some small amount of “play money” is acceptable…. Whether it’s invested in individual stocks, private equity, or some kind of greater-fool-theory type of investment (or gamble). But how much? If one doesn’t feel squeamish about losing the entire amount, then said amount is probably OK to stake.

As for W2 vs. business-owner – that’s entirely a matter of personality. Currently I work in a start-up, as a co-founder… and hate it. Utterly not for me. I was happier formerly, as a government employee.
Middle class wealth- $10 million?

I’m going to assume this info from 2019 is still more or less accurate: “The minimum net worth of the top 1% of households is roughly $11.1 million. The top 10% have a net worth of about $1.2 million.”
I suppose as an upper level of what's achievable as a white collar worker in today's society. $10m is achievable – but it's not a level of wealth that elevates you to the level of 'rich'. It's sort of an awkward level of wealth, as you don't need to work, but you could buy an entry-level yacht or jet, and then you wouldn't have any money.
What is a level of “rich” if it’s not $10MM?

Are you implying that in order to be “rich” a person need to have certain tangible items that that may actually not even want? Say, a yacht or a jet.

Is it possible for a person to feel rich, but not be rich by another persons measure?
$10m is 'wealthy'. But if you have a wealth manager and some fairly conservative investments, you're probably making a 4% return after fees, which is $400k, and in the UK, you're probably being taxed at 40% (there are workarounds), so you're seeing maybe $240k ($300k if you set yourself up as a ltd company and pay corporation tax).

Then you've got three kids in private school, at $50k each. You're left with $90k/year. You're not rich. Couple of iPhones, couple of cars, and you'd still have to work a day job.

I felt wealthy by the time I was midway into 6 figures, because I had no responsibilities, and I've been quite adept/lucky with investing. But objectively, there were certainly limits to what I could do. If I wanted two kids in top schools, I'd need a pretty wealthy partner. $10m managed extremely well could bump you up a bit. But it doesn't elevate from the middle classes. It's not an uncommon amount of capital.
I can only imagine what it’s like for the unemployed person in the UK with an equivalent $10MM net worth who has 6 kids in private schools at $50,000 per.
Being wrong compounds forever.
muffins14
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by muffins14 »

Logan Roy wrote: Sun May 28, 2023 3:36 pm
muffins14 wrote: Sun May 28, 2023 2:51 pm
FreddieFIRE wrote: Sat May 27, 2023 7:50 pm
broncocountry25 wrote: Sat May 27, 2023 7:21 pm I also have started saving for my kids to go to college but feel like college is now a complete waste of money and in 16+ years it will only be worse.
Do you feel this way about degrees related to healthcare or STEM? If so, I would like to hear the logic.
It probably will be worse in 16 years because most people won’t be able to read beyond a 5th grade level. And those who can’t will resent those who can practice “black magic” like mathematics, or read “witch books” like Shakespeare, or riddles, like poetry
The problem nowadays is you can have degrees in English and Philosophy, and still not be able to read or write properly. I'm recalling someone I worked with not long ago specifically with those degrees.

Lecturer friends tell me kids are turning up with much lower standard of numeracy and literacy than 10 years ago. And because something like 70% of colleges are in financial distress, they need the students, they let almost anyone in on clearing, and they have to lower standards to meet the students. Employers agree it would make infinitely more sense to nudge kids into apprenticeships, and leave academia for the 10-20% who are suited to it.
I’m pretty sure that an English major knows how to read and write. I think you’re a little overboard on your criticisms here. I had many friends with English BA and PhD. I assure you they can read and write properly
Crom laughs at your Four Winds
muffins14
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by muffins14 »

Logan Roy wrote: Mon May 29, 2023 9:53 am
Wanderingwheelz wrote: Mon May 29, 2023 8:32 am
Logan Roy wrote: Sun May 28, 2023 6:34 pm
Wanderingwheelz wrote: Sun May 28, 2023 6:03 pm
unwitting_gulag wrote: Sat May 27, 2023 11:41 pm There are two kinds of wealth; middle-class wealth, and spectacular wealth. Middle class wealth (a handful of millions, maybe $10M) is buildable in today’s dollars within a normal career-length (call it 30-40 years), a “normal” professional’s salary, and the S&P 500 index fund. $100M is however unreachable with that strategy. A different strategy would be needed. Unfortunately, that strategy has high chances of blowing-up… not just underperforming, but failing… spectacularly.

Perhaps a core BH tenet would be, to settle for mere middle-class wealth, lest one end up doing worse, by aiming for spectacular wealth?

Most of us would presumably concede, that some small amount of “play money” is acceptable…. Whether it’s invested in individual stocks, private equity, or some kind of greater-fool-theory type of investment (or gamble). But how much? If one doesn’t feel squeamish about losing the entire amount, then said amount is probably OK to stake.

As for W2 vs. business-owner – that’s entirely a matter of personality. Currently I work in a start-up, as a co-founder… and hate it. Utterly not for me. I was happier formerly, as a government employee.
Middle class wealth- $10 million?

I’m going to assume this info from 2019 is still more or less accurate: “The minimum net worth of the top 1% of households is roughly $11.1 million. The top 10% have a net worth of about $1.2 million.”
I suppose as an upper level of what's achievable as a white collar worker in today's society. $10m is achievable – but it's not a level of wealth that elevates you to the level of 'rich'. It's sort of an awkward level of wealth, as you don't need to work, but you could buy an entry-level yacht or jet, and then you wouldn't have any money.
What is a level of “rich” if it’s not $10MM?

Are you implying that in order to be “rich” a person need to have certain tangible items that that may actually not even want? Say, a yacht or a jet.

Is it possible for a person to feel rich, but not be rich by another persons measure?
$10m is 'wealthy'. But if you have a wealth manager and some fairly conservative investments, you're probably making a 4% return after fees, which is $400k, and in the UK, you're probably being taxed at 40% (there are workarounds), so you're seeing maybe $240k ($300k if you set yourself up as a ltd company and pay corporation tax).

Then you've got three kids in private school, at $50k each. You're left with $90k/year. You're not rich. Couple of iPhones, couple of cars, and you'd still have to work a day job.

I felt wealthy by the time I was midway into 6 figures, because I had no responsibilities, and I've been quite adept/lucky with investing. But objectively, there were certainly limits to what I could do. If I wanted two kids in top schools, I'd need a pretty wealthy partner. $10m managed extremely well could bump you up a bit. But it doesn't elevate from the middle classes. It's not an uncommon amount of capital.
If you have 10M and need to pay for school, just do it. Spend more than 4% for a few years. It’s not an ongoing expense. Eventually the kids are done with school and that expense is gone, and you still have your very-large portfolio.
Most people with kids still have a parent who is still working though, because kids are expensive

Your scenario is a little silly again. The vast majority of families with kids do not have 10M, and most are doing just fine making ends meet.
Crom laughs at your Four Winds
Kendall Roy
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by Kendall Roy »

Logan Roy wrote: Sun May 28, 2023 11:59 am The thing with business is the world changes very quickly .. I've built three successful businesses .. The first was online clothing retail, which was ludicrously profitable – but gradually became oversaturated, and margins halved periodically.. That's what happens.

Two were in media, and e.g. print media went into decline really quite suddenly, and this brand I'd built was quickly worthless.. I'm lucky I've always been a pessimist, because I never really reinvested in those businesses – the earnings went into cash and stocks. So I've come to think of successful businesses as opportunities to buy a lot more assets, because long-term business success is probably extremely rare. It's often very fleeting.
This post resonates with me. So much so that after 5 years lurking I have registered to comment.
I run a successful print media business, am a pessimist in business and think the success may be fleeting. Finally, I just watched the last episode of Succession.
Cheers Logan!
Leesbro63
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by Leesbro63 »

stoptothink wrote: Mon May 29, 2023 10:48 am
Leesbro63 wrote: Mon May 29, 2023 10:16 am There is a recent episode of “Succession” where “Cousin Greg” says his grandfather will leave him $5M. The mega wealthy Cousin Conor tells Greg that $5M is a nightmare. Enough that it’s not worth working, but you can’t retire.

$10M used to be wealthy around here. Maybe with the 2021-23 inflation it’s $12M now.
According to a recent Schwab survey https://www.kiplinger.com/personal-fina ... iabilities.), Americans - on average - believe that the threshold for "rich" is networth of $2.2M. We're pretty darn close to that at 42 and 37. We have way more than we ever could have imagined, but I wouldn't say we consider ourselves rich; probably because we are super frugal. If our parents, siblings, and friends knew our NW, I'd bet the large majority of them would consider us rich (her parents would lose their mind).

This totally depends on your social circle. For this board, it's no surprise that the threshold is higher than what the average American thinks.
First, let me say that at age 40 (average) and $2M saved, congratulations to you. Well done. That being said, some survey of what Americans, on average, think is "rich" is pretty meaningless. The average American doesn't have $1000 in the bank for an emergency, so sure $2M sounds rich.

But if $2M is all you have, say even with a paid off house and two paid off cars, you're looking at $80,000 of spending money using the 4% rule. At age 40, you're probably should be using a 3% rule/$60,000. In the midwest, in a nice but not over the top suburb, $80K can provide a decent lifestyle. But there's no way that's buying any sort of "rich" lifestyle. Although, again, to the guy living from paycheck to paycheck without $1000 in the bank, $80,000 a year to spend in perpetuity is indeed rich.
stoptothink
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by stoptothink »

Kendall Roy wrote: Mon May 29, 2023 12:16 pm
Logan Roy wrote: Sun May 28, 2023 11:59 am The thing with business is the world changes very quickly .. I've built three successful businesses .. The first was online clothing retail, which was ludicrously profitable – but gradually became oversaturated, and margins halved periodically.. That's what happens.

Two were in media, and e.g. print media went into decline really quite suddenly, and this brand I'd built was quickly worthless.. I'm lucky I've always been a pessimist, because I never really reinvested in those businesses – the earnings went into cash and stocks. So I've come to think of successful businesses as opportunities to buy a lot more assets, because long-term business success is probably extremely rare. It's often very fleeting.
This post resonates with me. So much so that after 5 years lurking I have registered to comment.
I run a successful print media business, am a pessimist in business and think the success may be fleeting. Finally, I just watched the last episode of Succession.
Cheers Logan!
I'm guessing you registered specifically to reply to this post and were just following the "Logan Roy" name, but just have to say, I love the "Succession" references. One of the best shows ever.
stoptothink
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by stoptothink »

Leesbro63 wrote: Mon May 29, 2023 1:44 pm
stoptothink wrote: Mon May 29, 2023 10:48 am
Leesbro63 wrote: Mon May 29, 2023 10:16 am There is a recent episode of “Succession” where “Cousin Greg” says his grandfather will leave him $5M. The mega wealthy Cousin Conor tells Greg that $5M is a nightmare. Enough that it’s not worth working, but you can’t retire.

$10M used to be wealthy around here. Maybe with the 2021-23 inflation it’s $12M now.
According to a recent Schwab survey https://www.kiplinger.com/personal-fina ... iabilities.), Americans - on average - believe that the threshold for "rich" is networth of $2.2M. We're pretty darn close to that at 42 and 37. We have way more than we ever could have imagined, but I wouldn't say we consider ourselves rich; probably because we are super frugal. If our parents, siblings, and friends knew our NW, I'd bet the large majority of them would consider us rich (her parents would lose their mind).

This totally depends on your social circle. For this board, it's no surprise that the threshold is higher than what the average American thinks.
First, let me say that at age 40 (average) and $2M saved, congratulations to you. Well done. That being said, some survey of what Americans, on average, think is "rich" is pretty meaningless. The average American doesn't have $1000 in the bank for an emergency, so sure $2M sounds rich.

But if $2M is all you have, say even with a paid off house and two paid off cars, you're looking at $80,000 of spending money using the 4% rule. At age 40, you're probably should be using a 3% rule/$60,000. In the midwest, in a nice but not over the top suburb, $80K can provide a decent lifestyle. But there's no way that's buying any sort of "rich" lifestyle. Although, again, to the guy living from paycheck to paycheck without $1000 in the bank, $80,000 a year to spend in perpetuity is indeed rich.
Well, yes, the average American doesn't have a lot of money, not sure how that is relevant regarding the common definition of "rich". The only data we have suggests that if you asked some random person on a U.S. street if someone worth $2.2M is rich, there is at least a 50/50 chance they will say yes. That number also puts you ~98th percentile for NW among U.S. households.

I certainly don't feel rich and would never refer to myself as such, but this board is not representative of the general population on such topics.
Last edited by stoptothink on Mon May 29, 2023 4:10 pm, edited 1 time in total.
YeahBuddy
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Re: 33 - 1.4M Net Worth Drifting From Boglehead Strategy

Post by YeahBuddy »

smitcat wrote: Mon May 29, 2023 9:06 am
RobLyons wrote: Sun May 28, 2023 8:48 pm I'm 42 and I tried many different avenues before I found the Boglehead strategy. Since that time, I've encountered many who believed their way was better. Either investment strategy or small business owners. Many did well for a short period and then things came back to earth.

I don't intend to do anything differently. I will continue with my W-2. I have much more free time than many business owners I know and that's worth a lot to me.
"Many did well for a short period and then things came back to earth."
We wish that we started our own business's earlier than we actually did. While we were in our small businesses for 15+ years the earlier start would have been great. After selling a few years back the new owners are continuing to do really well.

That’s excellent. I could say the same thing about my current profession. But that’s all subjective. We know the statistics about small business success vs W2. Something like half of all small businesses fail within 5 years.

I guess whatever works for you is good!

I also share your sentiment that college is mostly a huge waste in this country. Big money grab with poor highschool guidance for decades. Recently I heard some news about free community college for residents. Can’t remember if that’s Boston or where but it’s a great start.
Light weight baby!
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